Subsidy???

Question

Can someone please explain what a subsidy is to me? It terms of company subsidies?

In terms of a Telco company.

Answer 1

This is when the compnay partially pays for the product, in which the customer (you) will have to give something special in return.

If it's a telco company, it's usually agreeing to a 2 year contract and other terms.

One current example is AT&T's subsidy on the iPhone. The iPhone 3G's MSRP is $499, but AT&T is paying for a majority of it, and reducing it to $199

Answer 2

Governments may offer a company a subsidy, money that is to induce them to behave in some way, or even just keep on providing a low profit service.

A company that has multiple business units may use money from one business unit to subsidize another business unit to keep it from losing business share to a competitor, or to take share away from a competitor.

In a broad general way it is considered unethical for a company to subsidize a business unit in such wise as to hurt competitors. Laws are written to keep this from happening, until the company discovers a way to hide their subsidy.